Separating - can we buy another house which is not a BTL?

C

Carney

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Hi All, Myself and wife are working out what next as we are separating. Very lucky in that things are amicable and we are both earning good money. I will of course be getting legal advice and investigating things officially with mortgage brokers and ultimately banks but am just hoping for some informed opinion regarding our current thinking.

Current situation, still paying off mortgage on our joint mortgage home, 130k remaining, 11 years, property probably worth about 350k today, monthly mortgage payment is about 1200. Im earning about 100k, she is on about 75k so should be ample room to afford second mortgage. 2 teen kids and we are agreed that coparenting is what we both want for them, no winners or losers here just time to move on.

We have agreed that I will stay in family home, she is looking for somewhere smaller in town anyway, €230-250k. We have some savings, about 25k in the bank. As things are amicable we want to avoid legal / formal at this stage and will aim for legal separation to document what we agree (rather than mandated judicial, contested separation) we will agree what her share of house value is but if we can get second mortgage now, this balance will not need to be released immediately (i have very good fixed rate i dont want to mess with for a few years in current climate). So main question which I have is, in Ireland, can we just buy a second property? Want to avoid having to find 30% for buy to let (which it would not be) so we can move on quickly, so hoping to avail of "normal" mortgage, 10% down, would be in both names and both incomes for now then legal separation would take her off main house and take me off the new house.

Initial advice we have received from broker is that we could say we are looking to downsize and keep original property, this would mean switching PPR to the new smaller house (her new place), advice is take the second mortgage out with a different bank, this is what "a lot of people do in this situation".

Any thoughts? There does not seem to be an offering from banks that is not Buy to Let / Investment property, how do people finance the holiday cottage by the seaside?
 
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Judicial separation is not necessarily contested; you can agree terms yourself and have them used for the JS.

You will need SA or JS to be in place; family home to be in one person's name & then the other party can get a mortgage in their name.
 
Holiday cottage comes under the BTL type loan umbrella. Simplest would be BTL in sole name but then you're stuck for the 30% deposit. Failing that then maybe try broker's suggestion, however you would want to be very sure that when it comes to it the second name can be taken off both mortgages. This will be up to the lender and not any agreement you both make so unless the lender is happy that the existing mortgages meet underwriting criteria on the sole income then they won't take off a name.

Had this scenario years ago where a couple who did buy a second BTL then split up, one moved to the BTL and when they went to regularise the situation by having one home each in a single name the bank would not remove wife from the husbands house/mortgage as his income was insufficient according to the bank, so basically she ended up on the hook for both mortgages and he was on one, not a happy bunny!
 
Thanks for your inputs, current thinking is that the quickest way to move forward and get second property would be joint application, alternative was looking like Separation Agreement to get her off mortgage so she can go out on her own, (im paying full mortgage and bills anyway so no change for me there) my understanding is that this would take a good while to get sorted out even with agreement. think I will speak to a fe brokers to get a feel for what might be possible.
 
Do you have the deposit for a second house?

If you are separated, will they give her a mortgage in her own name. If so, that would be by far the cleanest.

With a buy to let, you will be both on the mortgage and paying a higher rate.

And it's better to have a clean break. You are getting on fine now, but when you see her with another man or vice versa, then the amicableness might well finish.

Brendan
 
Good point Brendan. Have about 25k saved so could make the 10% deposit if we had that option, getting 30% together would need some time so probably then look at the seperate and break the mortgage option instead but that's gonna drag things out I feel. Real ask is if BTL with 30% deposit is the only option for "couple" to get second property.
 
Was speaking briefly to financial advisor earlier, he suggested that if things are that amicable we should consider going direct to bank, look to remortgage to get her off and free her up to do what she wants. Bank would still want/need to see separation order he thinks.
 
Another thing I would like confirmed/clarified if possible. In the event that we legally separate and approach the bank for me to refinance and buy her half out, am I entitled to retain my current fixed rate (2.95%). Did mor research last night and the waiting list for mediation service is down to about 3 weeks in the midlands so might not be that drawn out afterall.
 
Have a look at your local credit union. Many offer mortgages and you can present the situation directly to real people.
 
Honestly this sounds overly complicated and risky. You both are setting out with good intentions but ideally its bettsr to have a clean break and not get your finances all tangled up further.
You can look into a "Transfer of Equity" with lender in order to buy your wife out of the house. Instead of this, you may also be able to have your wife sign an undertaking stating she has no right to the house, but im not sure how often this is used in practice and of potential drawbacks. With the transfer of equity the name will come over the mortgage (assuming you meet criteria) and also the deeds.
Would your wife consider renting while you figure all this out?
 
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